✨  Don't miss out! Register for our Employee Appreciation Webinar scheduled for 29th February.🎖️
✨  Don't miss out! Register for our Employee Appreciation Webinar scheduled for 29th February.🎖️

Register now

Live Webinar: Secrets to Building a Successful B2B2C Growth Flywheel
Save your spot now

The Empuls Glossary

Glossary of Human Resources Management and Employee Benefit Terms

Visit Hr Glossaries

Employee Rewards 

Employee rewards are gifts, incentives, praises, or prizes that an organization gives to its workforce from time to time to award their efforts and achievements. Not only do rewards drive positive reinforcement, but they also motivate employees to keep performing better.

Interestingly, employee rewards can either be intrinsic or extrinsic. While intrinsic rewards are non-tangible, extrinsic rewards are tangible. 

  • Extrinsic rewards are tangible rewards that are tied to specific employee behaviors, time, job roles, or skills in an organization. They are in the form of gifts, incentives, pay hikes, bonuses, commission payments, stock options, corporate discounts, and extra paid leave.
  • Intrinsic rewards are non-tangible rewards that make an employee feel good and happy, providing a sense of internal satisfaction every time they successfully complete their projects or tasks. They are in the form of appreciation, compliments, praises, and thank you messages.

What are employee rewards?

An employee reward is just that tool organizations leverage to recognize top talent and reward them for achieving milestones, reaching goals, or a job well done. The primary reason organizations distribute rewards is to help attract, maintain, and retain high-performing employees. 

Listen, recognize, award, and retain your employees with our Employee engagement software  

Why are employee rewards important?

When employees are rewarded for their achievements, they feel a sense of pride, ownership, and willingness to work as motivated as they were in the upcoming projects. Rewarding connects employees to the organization, enhances work performance, and increases their chances of staying.

Employee rewards are important because they help:

  • Increase productivity
  • Encourage teamwork
  • Retain employees
  • Recognize and motivate top performers
  • Thank employees for exceeding or reaching goals 

What are the different types of employee rewards?

Employee rewards can be classified into 8 types, and these include:

  • Intrinsic rewards: These are non-tangible rewards that result from higher levels of work satisfaction or feeling good at the workplace. These rewards make employees feel valued in an organisation. Some example includes, appreciations, completing a project on time, personal achievements, career growth, etc. 
  • Extrinsic rewards: These are tangible rewards that employees get for doing an excellent job at the workplace. These rewards help in improving employees' performance via appreciation. Some examples can be gifts, pay hikes, bonuses, promotions, etc.
  • Financial rewards: These work positively by contributing to the overall financial well-being of the employees. It includes salary raises, bonuses, benefits, perks, etc.
  • Non-financial rewards: These don’t provide any financial gains to the employees but focus on appreciating them through benefits. It includes gym memberships, branded gift cards, free parking spaces, etc.
  • Performance-based rewards: These are allotted based on employee performance in an organization. These rewards are usually distributed in incentive systems, pay plans, commissions, or group bonuses.
  • Membership-based rewards: These are distributed in the form of services and benefits to the employees. It usually includes an annual company retreat, Christmas bonus, improved office furnishing, etc.
  • Monetary rewards: These rewards work excellently for employees who are motivated and inspired by money. While a semi-annual or annual bonus is an ideal example of a monetary reward system, other examples include stock options, profit-sharing plans, and cash awards. These rewards not only encourage healthy competition but also boosts productivity and performance.
  • Non-monetary rewards: These rewards satisfy the psychological desires of employees by recognizing their efforts regularly. This could be as simple as a “top performer” or  “employee of the month” certificate. Besides the above, other examples include extra paid leave, flexible work hours, gym memberships, etc.

What are employee reward programs?

Employee reward programs are a tool or a tactic that organizations use to acknowledge and appreciate employee performance in either intrinsic or extrinsic ways. 

These programs can be at either individual or group levels and are designed to fulfill three essential purposes:

  • Motivate efforts: Celebrate strong efforts every time employees go the extra mile in proving their talent. Rewarding their work and accomplishments on time helps build emotional connections, fuelling future performance. 
  • Reinforce values: Rewarding actions and behaviours frequently is a way to show employees that they are valued by their leaders, managers, and the company as a whole. 
  • Retain employees: When employees are praised and rewarded for good work, they feel happy and engaged and stick around with the organization longer. The underlying reason is simple: employees want to work where they are valued and appreciated with tangible actions. 
  • Boost motivation: Offering timely rewards to employees for their performance helps boost motivation and maintain a positive attitude. It encourages collaboration and gives people something to work towards. 

Pro Tip:

Motivate employees with rewards of their choice. Delight employees with rewards for every milestone and achievement.

Talk to our employee rewards expert today!

How to create an employee rewards program? 

A well-designed employee rewards program can create a positive atmosphere where people feel valued and appreciated. It builds loyalty, drives positive behaviors, and encourages employees to perform better.

Here’s a step-by-step process to creating an employee rewards program:

  • Determine the ‘why’: Start by asking this—why are we putting so much energy, time, and effort into creating an employee rewards program? Jot down the benefits you think your teams would benefit from this program.
  • Follow best practices: Lay down a strong foundation by building your rewards program around best practices to deliver a positive impact. Ensure that the program is personal, unexpected, tangible, frequent, prompt, public, and values-based. 
  • Set a budget: Take both administrative cost and rewards cost into account. Plan accordingly and get necessary approvals from the top management. 
  • Define the rewards criteria: The main idea behind setting the standards for rewards is to drive behaviors that you want to see in your employees. So, decide on what type of behaviors must be rewarded and how often. 
  • Involve managers: Select influential managers who are rewarding their teams frequently already. Discuss the significance of frequent feedback and how to create a budget-friendly and systemized approach. 
  • Program announcement: Reach out to your employees wherever they are to ensure the news is effectively communicated. Use different communication modes—internal newsletters, emails, chat messages, meeting announcements—the whole nine yards.
  • Implement and measure: Once you have launched your rewards program, review its success level with a quick follow-up survey. Ask the right questions and see if you notice a change in your people. 

How to reward employee performance?

Rewarding employees for their excellent performance is vital for retention and keeping their motivation levels high. When employees' efforts are rewarded, they are more likely to become productive and loyal. 

The idea is to celebrate employees for their hard work, accomplishments, or well-done job. Know that not all employee rewards are crafted to be the same — it's more about focusing on making the appreciation meaningful and impactful. 

Here are some quick ideas to reward employee performance:

  • Say ‘thanks’ publicly: Even a mere “thank you” can do wonders if you address someone publicly. This could be either in the town hall, all-company meeting, group video calls, or an internal email blast
  • Surprise them with gifts: You don’t have to exceed the budget with hefty cash rewards. Instead, think of inexpensive yet thoughtful gifts such as gift cards to their favorite online store, coffee shop, movie tickets, or music concert.
  • Give paid time off: If you notice that your employees are contributing extra hours or spending their weekend only to complete a project, offer them a paid day off — or at least, let them take off early on a Friday.
  • Personalize rewards with what employees want: Know about your employees’ traits, needs, and goals before sending out rewards, and the best way to know this is by running a quick survey. 
  • Gamify rewards: A good employee rewards strategy should ideally include rewards earned via competition (example: prizes, gift cards, spot awards, gamification) and rewards earned via outstanding work (example: handwritten notes or team lunches). 
  • Revive your rewards: Employees can quickly get bored when they receive the same old rewards. Over time, it decreases the value of that reward too. If you want your employees to strive for excellence constantly, refresh your rewards frequently and create a sense of urgency within them.

Do employee rewards programs work? 

Yes, they do. In fact, recognizing and rewarding employees is a crucial part of an HR toolkit. Do you know why? It’s because even the most talented teams can falter, and even the most motivated employees can turn disenfranchised. 

This is where employee rewards programs play an invaluable role in getting the most out of your workforce. They are expensive to implement and cause less disruption to your business operations. 

Once implemented, employee reward programs have the power to generate a myriad of benefits, which include:

  • Enhanced productivity 
  • Increased profitability 
  • Reduced employee turnover
  • Positive company culture
  • Better team collaboration
  • Improved employee retention
  • Higher engagement levels

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.


eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

  • Promoters
    Employees who have responded positively or agreed.
  • Detractors
    Employees who have reacted negatively or disagreed.
  • Passives
    Employees who have stayed neutral with their responses.

What is the employee reward system?

An employee reward system refers to a program that a company or an organization sets up to acknowledge and reward top-performing employees, either intrinsically or extrinsically.

Quick Links

Employee Engagement solutions

Recognised by market experts